My guess, and I'm absolutely no expert, is that they work as a contractor for you and assume their own risks - you pay them and they take care of taxes and such like that. I'm not sure about things like worker's compensation for injury, though. You'd be best to talk to an accountant, perhaps, who could advise you on those sorts of costs and requirements. Good luck!

http://www.caring.com/questions/tax-responsibilities-hiring-home-health-aide
This link will give you some info on hiring an independent caregiver.  We were lucky to be able to hire my dad's caregiver separately from the agency she works for.  He couldn't afford $7700/month for 24/7 care.  The agency owner was sympathetic to his situation, and also realized how much she and my dad had bonded in their time together.  She was also instrumental in his initial stroke recovery.  After my dad paid agency rates for a couple weeks, we were able to hire her "off-contract" as an exception to their policy.  I believe most agencies state in the contract that you can't hire their caregivers separately for a period of time.  Good luck to you, hope you work it out quickly!

 NewMexicoTam is right, at least in California and with the agencies we've used.  First, your contract with the agency probably says that you have to pay a large fine if you hire the caregiver away from them.  Second, you must pay social security taxes for a person who works in your home for more than some trivial hours per month or quarter.  DO check with an accountant about the taxes, and re-read your contract with the agency.

In any case, if you decide to hire a caregiver directly, consider using a service to manage the taxes.  My father went crazy trying to handle the CA state paperwork himself for my mother's caregiver, and later when he needed care we used a company called Breedlove (www.breedlove-online.com).

Thank you so much...all of the above is really helpful. I found out that you can get some kind of workmen's comp through most home owenrs insurances.....and the tax issue, like you all said, is quite complicated. Nevertheless, I will work everything out...Thanks again.

I took care of my mom who died of Lou Gehrig's Diease (ALS)  in 1999.  After she passed away, we moved to a large city and through the agencies I worked for had a clause in the contract you sign with them at the start of services that could state "you are not allowed to hire a caregiver directly without our written consent and approval for at least 6 months to a year due to los of wages to the agency."  If you are wanting to hire  the caregiver directly you want to make sure the agency does not have a clause in the contract you signed with them. Some companies may use this against you and demand reimbursement for lost of money.  Im just saying this because i have worked in this filed for 25 years and own a home health care agency myself and have seen cases like this.  Please make sure you have permission in writing with the agency and the caregiver you are wanting to hire.  I would hate to see good hearted individuals getting hurt for doing the right thing for their loved one.  I hope this helps.  Take care.